KDDI and Rakuten cooperate to promote competition in payments, logistics and telecommunications

Utilizing each other's assets to promote service competition and improve customer convenience

KDDI Corporation

Okinawa Cellular Telephone Company

Rakuten, Inc.

Tokyo, November 1, 2018―KDDI Corporation, Okinawa Cellular Telephone Company and Rakuten, Inc. have today reached an agreement regarding the mutual use of the assets held by each company in payments, logistics and telecommunications to further bolster the competitiveness of each companies' services in those fields and improve convenience for customers.

KDDI Group aims to provide new experience value for its customers by integrating its telecommunications services and life design services, such as its commerce, finance, energy, entertainment and education services. Specifically, the group is working to combine its financial services, such as its life and non-life insurance, home loan services and payment services, its e-commerce services, such as the "Wowma!" internet shopping mall, with its cutting-edge technologies, such as 5G, IoT and AI, to promote the development of more convenient services that enrich the lives of its customers, and accelerate its initiatives aimed at "Maximizing the au Economic Zone."

Rakuten Group offers a broad range of services in commerce, fintech, communications and digital content, which are linked through the Rakuten ID membership to create the Rakuten Ecosystem. As the barriers between offline and online retail are broken down and the lifestyles and needs of users diversify, Rakuten will continue to evolve the services that make up its ecosystem to adapt to these changes.

In the agreement, the two companies are planning the following initiatives in payments, logistics and telecommunications.

1. Cooperation in payments services

Rakuten provides a wide variety of payment services, ranging from credit cards to e-money. In the growing field of QR code payment services, the "Rakuten Pay" app is now the largest service in Japan by the number of users [See Note 1].

KDDI is also strengthening its position in the payments field, with services such as "au WALLET" and "au KANTAN KESSAI" carrier billing. As of end of September 2018, the company has issued approximately 24.2 million "au WALLET credit cards" and "au WALLET pre-paid cards." The company plans to offer its own barcode and QR code payment service "au PAY" from April 2019.

Rakuten will provide its payment platforms, including the Rakuten Pay QR code payment, and network of affiliated stores to KDDI. KDDI will leverage this network of approximately 1.2 million affiliated stores and locations nationwide to launch its barcode and QR payment service au PAY from April 2019. By promoting the mutual use of both companies' payment services, the companies aim to improve customer convenience and accelerate their vision of a cashless society.

2. Cooperation in logistics services

In recent years, issues faced by the domestic logistics industry, such as the increasing number of redeliveries and staff shortages, are becoming broader social issues, and it is becoming more difficult for online stores to ensure stable operations. In order to address these issues, Rakuten has established a "One Delivery" vision for a comprehensive end-to-end logistics service for merchants on the Rakuten Ichiba marketplace that covers all stages of the process, from order to delivery, and includes a variety of initiatives with Rakuten Super Logistics and Rakuten EXPRESS.

Rakuten will provide its logistics services to the Wowma! internet shopping mall operated by KDDI from April 2019. By jointly promoting Rakuten's One Delivery vision, the two companies aim to realize efficient logistics and delivery services to address the issues faced in the logistics industry and further expand and develop the domestic e-commerce market.

3. Roaming agreement for communications network

With the aim of contributing to the promotion of competition in the mobile communications industry, KDDI has signed an agreement with Rakuten to provide roaming services to Rakuten for its 4G mobile network (LTE service) to be launched in October 2019. Through the agreement, Rakuten will be able to offer a nationwide LTE service from launch.

In the agreement, KDDI will provide roaming services until the end of March 2026. During this period, Rakuten will build out its own network, and will begin offering its own network services in areas where the construction of the network has been completed.

Planned roaming areas

Nationwide, excluding the 23 wards of Tokyo, Osaka City and Nagoya City.

Going forward, KDDI Group and Rakuten Group will work to promote robust competition in the various business areas the two groups operate in to further improve service quality and convenience for their respective customers.

[1] Based on a survey of QR code payment service use with 1,200 responses, carried out in January 2018 by INTAGE Inc. on behalf of Rakuten

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